Bangert: Enough already along State Street?

With a third high-rise on the way near Purdue, West Lafayette already tempering ideas about what a land rush along State Street might bring next in what's being called the city's new downtown.

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Erik Carlson, West Lafayette development director, points out where Hub Plus, a proposed 15-story mixed-used development, would go, replacing a Smart Shop filling station at Salisbury and State streets. Hub Plus would be the third project of 10 or more stories near Purdue in the past year, spurred in part by West Lafayette and Purdue's $120 million State Street project.(Photo: John Terhune/Journal & Courier)Buy Photo

WEST LAFAYETTE, Ind. – It’s not as if anyone at University Lutheran Church was oblivious to the big development dreams simmering all around their modest, stone chapel, where 40 to 60 people worshiped each week.

Everyone by that time in late 2015 knew about the $120 million State Street project, the city’s hopes for what the mayor was calling a new downtown and the crush of housing and retail options about to be unleashed all around a tiny, gray church.

But cash from a $1.7 million capital campaign was coming in. Alumni had just returned to their campus church home in October 2015 for formal groundbreaking ceremonies on renovations meant to make a place built in the 1950s more accessible and more inviting. And the congregation generally was prepared to dig in for decades to come at the corner of Chauncey Avenue and State Street.

Then, a few day after Christmas in 2015, the phone rang.

That call pulled a content congregation into the thick of a hot real estate trend that eventually set the stage for what would be three of the tallest projects ever on the edges of Purdue University.

That call also brought into focus the now-or-never urgency of developers looking to get in early on a State Street land rush – and willing to pay premiums to do it before city hall eventually said enough was enough on a craze that was barely underway.

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The Rise at Chauncey, a 15-story mixed-use project, is planned to go where University Lutheran Church sits at the corner of Chauncey Avenue and State Street in West Lafayette. The project is one of three developments of 10 or more stories expected in the West Lafayette Village area near Purdue.(Photo: John Terhune/Journal & Courier)

“I remember that call very well,” said Steve Strauch, district vice president of the Lutheran Church Extension Fund, a finance and facilities arm for the Indiana District of the Lutheran Church-Missouri Synod.

The caller was persistent. Strauch gave in a bit, saying that, yes, he’d be willing to look at a letter of intent with an offer on the one-acre lot near the top of State Street hill, provided the caller understood a repeated caveat: “There’s no way.”

The figure in the letter – something in the range of $5 million – changed the conversation. That was more than twice the $2.1 million appraisal the city delivered months earlier when it wanted to slice off a tenth-of-an-acre of University Lutheran’s lot for State Street construction.

“We started realizing, wait a minute,” Strauch said. “All these big, huge buildings are going to come. And that little church might get swallowed up. … If we say no to everybody, what we’re going to get is an elevator, we’re going to get a couple of restrooms, we’re going to spruce it up and probably still worship with 40 to 60 (each Sunday). And that’s what the future holds.”

So these were the conditions when University Lutheran allowed developers a foot in the door, Strauch said: Find a church known as “ULu” a new home, closer to campus, without having the congregation paying more than it spent. The original developer eventually bailed, only to be replaced the same day by letters of intent from two other suitors.

“And a third one was circling pretty hard,” Strauch said.

University Lutheran wound up selling for $5.325 million, clearing way for Rise at Chauncey, a 15-story mix of retail and student-oriented housing project being developed by the Chicago-based team of CA Ventures and R2 Companies. University Lutheran used $4.5 million to buy a four-story building at 460 Northwestern Ave., most recently owned by The Exponent, a student newspaper.

“It really wasn’t our original plan,” Strauch said. “And it really wasn’t about the money. But with everything going on around ULu, it feels like what’s happening with State Street is part of God’s plan and the road He was sending us down.”

STATE STREET’S INVITATION

Touched by providence or not, the $120 million investment in State Street – a project evenly split between the city and Purdue and meant to spur a pedestrian-heavy, more urban-style near campus – was a not-so-subtle invitation to developers: West Lafayette is ready for big, tall projects.

Short of God’s plan, perhaps, call it Mayor John Dennis’ plan.

But just as State Street hill is ripped up to start an intense, 19 months of construction, the city is quietly trying to throttle enthusiasm for more behemoth projects and that now-or-never urgency that, from a developers standpoint, seemed necessary to grab prime locations like University Lutheran.

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Crews work on the foundation of The Hub, a 10-story mixed-use development scheduled to open by August 2018 at the corner of Pierce and Wood streets in West Lafayette. The project is one of three developments of 10 or more stories expected in the West Lafayette Village area near Purdue.(Photo: John Terhune/Journal & Courier)

This month, details surfaced for the third development of 10 stories or more along or near State Street.

Hub Plus, a 15-story, 830-bed complex with more than 13,000 square feet of retail at State and Salisbury streets, is being drawn up right next door to the University Lutheran/Rise at Chauncey location. Hub Plus could go before Area Plan Commission and the West Lafayette City Council in June or July.

Hub Plus is the second development by Chicago-based team Core Spaces and Up Campus Properties, which started construction this spring on The Hub, a 10-story, 599-bed complex at Pierce and Wood Streets, a block south of the State Street corner that is home to Harry’s Chocolate Shop.

This is an artist's rendering of The Hub, a proposed 10-story, 599-bed residential project at Pierce and Wood streets, a few blocks from Purdue University. Construction started this spring.(Photo: Tippecanoe Area Plan Commission)

All three are planned developments, which give the city considerable say in negotiations about how projects come out for anything taller than West Lafayette’s standard 35-foot height restrictions.

Land prices tell part of the story of the competition for property and the city’s tolerance for taller buildings. According to sales disclosure records kept by the Tippecanoe County assessor’s office, the per-acre price for land used for a number of high-profile, five-story projects since 2011 ranged from $1.6 million to $3.5 million.

Developers of The Hub paid double that – a bit more than $7 million – for a 0.8-acre site. You know University Lutheran’s price. Numbers weren’t immediately available for two properties being set aside for Hub Plus.

Dennis said it’s no secret that developers are still circling, after the city signed off on two tall projects and is deep into the final details on a third.

“We’re well aware we’re a target for development,” Dennis said. “And we know why. We opened the door. I think there will continue to be a lot of interest. But here’s the thing …”

Dennis chooses his words carefully.

“The easiest thing to do is to sit back and say, ‘Bring it,’” Dennis said.

The city is, after all, paying off its $60 million share of State Street work by property taxes from new development in the Village and Levee areas.

“But if I start throwing up high-rises on every empty lot – or a lot that could be bought and made empty – that’s not going to fly. We can’t lose our soul when it comes to building a new downtown,” Dennis said. “What we can do in local government is provide a reality check for what is and what isn’t going to happen in West Lafayette.

“And right now,” Dennis said, “we’re in the enviable position of being able to say, ‘No.’”

“We have people telling us we can take a lot more,” Erik Carlson, West Lafayette’s development director, said. “But we’re thinking it’s time to step back, take a breather and see where we are.”

DEVELOPERS: WEST SIDE IS READY

Developers say interest in West Lafayette, nearest to Purdue, should be no surprise.

“I’m not sure you can say we’ve had a comparable moment to this,” said Steve Shook of The Shook Agency. Shook was the broker on the Exponent building sale to University Lutheran and was in on the competition for sites now slated for West Side’s high rises.

Hub Plus, left, shown in a sketch filed with Area Plan Commision, is a planned 15-story retail and apartment development at State and Salisbury streets. It would be built next to Rise at Chauncey, a 16-story building planned for the corner of State and Chauncey Avenue in West Lafayette. Hub Plus would be the third proposed development of 10 stories or more in the past year in the West Lafayette Village area, near Purdue University.(Photo: Area Plan Commission)

“I think there are comparables at other major universities,” Shook said. “It just didn’t happen here as fast as those other places. We were in line for it. I think our community was ready for it.”

Dan Hrankowsky, vice president of design and development at CA Ventures, said the firm didn’t look at $5.325 million for the University Lutheran site as a premium price, but as “market rate for a main corner near a major campus.” The price the firm paid for the property, he said, factored in West Lafayette’s allowances for a 16-story height – within a foot or two of Federal Aviation Administration limits that close to Purdue Airport – and density to include 675 beds on top of 21,000 square feet for a big-box retailer.

Plans for Rise at Chauncey, a three-building, 16-story development at South Chauncey Avenue and State Street, was approved in April by the West Lafayette City Council. It would go where University Lutheran Church sits now.(Photo: Tippecanoe County Area Plan Commission)

“It wasn’t a ‘now or never’ situation,” Hrankowsky said. “The timing is right and the correlation between the State Street improvements and other proposed developments is somewhat coincidental. The university is going to continue to grow, and housing needs will continue, and building density along the busiest corners and arteries will prevent student sprawl into neighborhoods. This is the result of great urban planning on West Lafayette’s part.”

Marc Muinzer, founder of Chicago-based South Street Capital, recently spent $4.7 million on the Miller Building with plans to renovate the historic building at the corner of State Street and Northwestern Avenue. (The Miller Building is home of Greyhouse coffee house.) South Street Capital is negotiating to build a five-story complex at 616 Stadium Ave., about a mile away, near the north side of campus. At the start of the decade, Muinzer also helped initiate work on Fuse, a five-story mix of upper-story apartments and ground-floor retail at 720 Northwestern Ave., which helped usher in a new age of West Lafayette redevelopment near campus.

“My take, we are in the second inning of this game,” Muinzer said. “Now more than ever, if you don't grow and evolve you become obsolete very quickly. What's just happening right now in West Lafayette has been happening at the other leading universities for the last 10 years. Older, obsolete housing stock is being replaced by urban, dense, high-amenity housing.

“I don't call it a land rush,” Muinzer said. “This is West Lafayette playing catch-up to the other major university towns.”

‘SOME UNREALISTIC EXPECTATIONS’

You won’t get an argument, to a certain extent, from Sallie Fahey, executive director of the Tippecanoe County Area Plan Commission. She and her staff are working to find that happy medium between the West Lafayette soul Dennis speaks of and the full-on press to develop by those with the land and cash to go bigger and higher.

“This isn’t a science,” Fahey said. “It’s sort of a sociological experiment, in some ways. You collect all these factors – what’s the vacancy rate doing, what’s Purdue going to do with campus housing, what’s happening with Purdue’s enrollment, all of that – and take our best guess at what we can absorb.”

Fahey said there will be room for projects smaller than the three high rises on the table now. Could another high rise work? Maybe right on State Street, Fahey said. She said she would rather have five to 10 years to see how the student housing market shakes out once those 2,100 beds are available and Purdue enrollment continues to grow beyond 40,000 students. Fahey also said a bigger question will be how well retail spaces fill and how well those “activate the streetscape envisioned in the State Street project.”

“We’re still seeing ideas for projects,” Fahey said. “Maybe too many right now. What we’re hearing are some unrealistic expectations. … But the big, grand projects, we’re at the point of saying, ‘Not yet.’”

So it was crucial to get in early on the three high-rises already in the pipeline?

“That’s fair to say, I think,” Fahey said. “I don’t think that was a real secret.”

In the meantime, Carlson said that not every project proposed will get as far as the back offices of the Morton Community Center, which serves as West Lafayette’s city hall.

“We’re not accepting just anything that comes through the door,” Carlson said. “We just don’t need to be in such as rush that we need to keep running at the speed some (developers) wish we would.”

Which means University Lutheran Church was at the right place, right time and right frame of mind when that call came two Christmases ago: “Would you consider selling?”

The church will hold a decommission service on June 4. After that, Strauch said, the congregation will spread out to other churches – Redeemer Lutheran, St. James Lutheran, Grace Lutheran – for the summer.

Before the church – designed by Walter Scholer, an architect of a number of buildings at Purdue – comes down, some stained glass, doors and the cornerstone will be moved to the new building on Northwestern Avenue, directly across from campus, Strauch said. Pews, the altar and the organ will be offered to other congregations in the synod. The new ULu sanctuary should be ready by August or September, with a coffeehouse and other amenities coming shortly after that, he said.

And, Strauch said, a whole new sort of ministry will be supported by an endowment funded, in part, by what was left from the sale of what became prime real estate along State Street.

“We’re a long way from, ‘There’s no way,’” Strauch said. “Those calls, we believe, were God’s call to us. What a time it is.”